Ordstyrer Welcome to the Liberator chat. My name is Daniel Beattie, and I will be your moderator tonight.
Our guest is N. Stephan Kinsella, adjunct scholar of the Mises Institute, blogger at LewRockwell.com and former Book Review Editor of the Mises Institute’s Journal of Libertarian Studies. Stephan is a practicing intellectual property attorney and general counsel of Applied Optoelectronics, Inc.
Tonight’s topic is libertarianism and intellectual property. Stephan is known to be an avid opponent of intellectual property rights and he has written several articles and essays on the subject.
When you want to ask Stephan a question, double-click Ordstyrer in the user list to the right and type your question in the new window that appears. I will then pass on questions to Stephan here in the main chat.
Welcome and thank you for joining us Stephan.

Kinsella Welcome

Ordstyrer Could you please begin with a few words about why you don’t see intellectual property rights as compatible with the negative libertarian rights?

Kinsella The basic reason is that after starting to practice IP law, and seeing holes in Rand’s justification, I kept searching and failed, and finally realized why first, most defenses of IP are unprinipled and utilitarian. I am an Austrian so have problems with utilitarian reasoning of this type.
And finally, the most fundamental problem is that IP amounts to assigning property rights in already-existing tangible property to non-producers. It dilutes real property rights.
Further, IP seems to necessarily be a creature of legislation–of the state; and is inherently vague and arbitrary. We are seeing this now.

Ordstyrer We have the first question, are you ready for the questions?

Kinsella ja

Ordstyrer LBO: In Against Intellectual Property you write about contractual IP that bookseller A may contract with bookbuyer B that he cannot copy or resell the book, but A cannot keep C, who did not enter the contract but happens to hear the plot of the book, from selling a book with that plot. But can A not contract with B that B must make sure that noone else sees B’s book or hear about the plot from him?

Kinsella Well, A may enter into a contract wtih B that prohibits B from doing certain things with the book. I think you can look at this two ways. First, the book is sold to B, but B agrees to conditionally pay monetary damages to A *if* B does certain things with the book (like shows it to others). Or, you could say the book is co-owned and that B has only limitd rights to use it; so if he shows it to someone else, it’s trespass.
But in either case, B either has to pay money to A, or can be punished by A. It does not imply that C may not use the *information* he obtained from B, since information is not property.
This is the missing link in Rothbard’s theory: you have to assume information is property, to make the contract IP work; but information is not property. Unlike a stolen watch, say.

Kinsella Make sense?

Ordstyrer Yes. The defence for intellectual property rights that I have heard most often, is that the writer, or musician or what not, has produced an original piece of work, and that this doesn’t differ from other property. And that he deserves to be rewarded for his work, just as every other person that produces something. What is your opinion on this?

Kinsella Right. I see a few problems with this. First, it does differ, in a couple of respects. If i find an unused thing and appropriate it, it does not affect your use of your own already-existing property. However, if I am granted an IP right, it gives me a right to control how you use your property. That is one difference.
Another problem is that this view relies on either the reward, or creation, theory of property rights. Each has problems: the reward theory is just utlitarian or wealth-maximization, and not principled. Plus there is no ending point; you might argue using this reasoning for tax dollars to fund innovation if the monopoly reward is not “enough” (some actually argue this — I can give links if needed)
And the creation idea is a main confusion I think for Randian and rights or principled types: the problem with it is that creation is not realy an indendent source of property rights; it is neither necessary nor sufficient. Think of it this way: if you take my metal and make a sword out of it, you create the sword, but you don’t own it. Creation is not sufficient. Conversely, if I find unused metal, and fashion a sword out of it, I own the sword because I owned the metal already–creation is not necessary.

Ordstyrer LHV: What is the main argument – in your opinion – that information is not property. Is it information’s non-materiality, or is it that it can be copied endlessly without depleting the source, so to speak?

Kinsella I think really, ownership of scarce resources can be established based on first use (appropriation), and based on contratual transfer from a previous owner. There is no other way, really. Yes, the main argument is that information is not a rivalrous or scarce resource. And–and this is implied by this–this means that granting rights in it necessarily restricts or invades rights in all other property.
Moreoever, there is a utilitarian concern, of a sort: there is no coherent or objective boundary or stopping point; and if you take this seriously, and implemented it, the human race woudl die out since we would not be able to use any tangible things becuase we could never obtain enough permissions.

Ordstyrer LBO: You write about trademarks that the consumers’ rights are violated if a company pretends to be another company by having the same name. But what if the fraud company claims not to be fooling it’s customers, but just happens to come up with the same name and concept as the original company? Doesn’t the fraud company has as much right to use its tangible property for a concept and a name as the original company?

Kinsella Probably, yes. Then it is just a factual question as to the nature of the understanding shared by the parties to a given transaction. Fraud is an intentional crime, after all. And the principle of caveat emptor–buyer beware–would apply.

Ordstyrer LHV: But ‘good’ information certainly is a scarce resource? Ideas might be shared by everyone, but not everyone can come up with a good idea.

Kinsella (I found the link for the post that discusses various proposals to actually have governemnt tax payer awards of innovation: http://blog.mises.org/blog/archives/003229.asp )
I think the use of the word “scarce” causes some problems; it makes IP advocates think the opponent is not recognizing the value of men’s mind or mental effort. But this is not true. The word scarcity in this context is jsut a special economic term, it really means rivalrous.
Good ideas might be “rare” and hard to come up with, but that does not mean that information itself is a rivalrous or scarce good: its use by any number of people does not deprive its use by others. It’s just a recipe, really–ideas, knowledge, or information. The idea that we can own ideas is really absurd, if you think about it. In my opinion, anyway.

Ordstyrer LBO: Even though you are not an utilitarian, do you know of any convincing utilitarian arguments against IP?

Kinsella Well, as I noted, if you had a principled set of IP laws, human survival would be impossible. I think that’s a pretty good utilitarian argument against IP– because it shows that the only type of IP system we could ever favor is one with arbitrary rules, and those can never therefore be just. But in addition, from my experience, there is not a single study that concludes that even in utilitarian terms the system is worth it. And most advocates do not really even try or care. So all we know is: the system has costs; and it has some apparent benefits; and no one konws if the latter are greater than teh former. So what is the justification to bear the cost?
(For one patent attorney’s “empirical” or experiential take on this, see this letter I posted recently: http://blog.mises.org/archives/005580.asp )

Ordstyrer Another classic in the IP debate, is that medicine would not be produced as we know it, since the testing and development is so expensive, that without patents it would not be possible to produce new medicin, and hence they would not be produced. What is your opinion on this?

Kinsella
Well, it does seem that the case of pharmaceuticals is perhaps oneof the strongest–or least weak–of the utilitarian cases for IP. But note, it is clearly utilitarian. My view is that (a) there has always been medical progress, and still would be, even without patents; and (b) the regulatory process (FDA approval) imposes costs too.
so: re (a): you cannot argue there will be NO medical progress, only “less” medical progress, without IP/patents. But again, if this is the standard, what in principle is wrong with just having tax payer dollars paid to “reward” innovators so that there is “enough” progress (assuming we can know this–why not try to achieve the optimal amoutn?). re (b): if you abolish the FDA and patents, drug companies would see lowered costs and quicker access to market, but also more competition. But at least removing the FDA regs would blunt the effects of pharmaceuticals.

Ordstyrer LBO: What do you think about the argument against IP that the will and mind is unalienable, and therefore if you have heard of an idea or a book plot, you cannot be forbidden to tell it to others?

Kinsella Well, this is I think not really necessary–simpler arguments are available, but there is a grain of truth in this comment. Even the otherwise abhorrent Tom Palmer (who is good on this issue) makes a good point along these lines: see p. 37 of my Against IP paper: http://www.mises.org/journals/jls/15_2/15_2_1.pdf
He points out that it would make no sense to say you are prohibited from “remembering’ something, “The separation and retention of the right to copy from the bundle of rights that we call property is proble matic. Could one reserve the right, for example, to remember something? Suppose that I wrote a book and offered it to you to read, but I had retained one right: the right to remember it. Would I be justified in taking you to court?
I would like to emphasize, as an aside, that I am all in favor of Carlsberg beer retaining its trademark and trade secret. 🙂

Ordstyrer LHV: But clearly copyright infringement on entertainment material (movies/music) is costing the entertainment industry a lot of money, not only theoretically but in practice. There might be movies anyway, and there might not, but with digital technology coming on strong, there certainly seems to be very heavy utilitarian arguments for IP here – even though the actual system might be flawed.

Kinsella Yes, I agree, the apparent costs (or lack of benefit) of a copyright system seem to be more noticeable or pronounced, in a digital world; but likewise, the costs of having the system are mroe apparently too: for example the enforcement mechanisms have become more and more draconian; e.g., in the US, the Digital Millenium Copyright Act, which actually outlaws the sale of devices designed to circumvent copy encryption schemes, EVEN if that circumvention is legal!
Moreover, notice: what are we all here doing? we are right now spending our time and effort to produce copyightable works (these words), without any real expecttation or care that we will be able to prevent ripoffs. The layout of the world will be different in one universe than another; and there will alwyas be visible transition effects and costs of moving from one to the other. This is perhaps one reason for inertia or resistance to change.
One more point: when libertarians grant that the system is flawed, it’s as if they concede particular cases of injustice I might point out. But when I ask them waht they are in favor of, they usually have no answer, saying that they are not IP experts. So it’s like these theists who say they believe in God but that he is undefinable so they realy don’t know what t hey believe in!

Ordstyrer Barnett: If I pass myself of as Kinsella and write books of significantly inferior quality under his name, thus destroying his hard-earned reputation, would this not be an argument in favor of the intellectual property right of owning my own name?

Kinsella Well le’ts clarify IP rights here. Strictly speaking you are talking of some kind of trademark or reputation right. Not really a copyright. Most of my fire is directed at the big culprits: patent and copyright. As I have noted, there is a core of legitimacy to some forms of trademark: fraud.
So, suppose you took Aristotle’s The Republic (okay, I’m joking, I know it’s realy Socrates) — and published it as Joe Dane’s Republic. You are not harming Plato. You are just making a laughingstock out of yourself. Moreover, I think this problem is always marginal: no serious person or businessman ever starts out to make a real reputation or success by imitating others. Look, it is legal now to pretend you are Plato. But no one does it–why?
I would say this: if you use my name to get access to my bank accoun,t say, you are committing theft of my money, because you do not have my consent to it. So in this sense, ID theft is a type of crime. And you could be defrauding your customers if you use the wrong name. BUt it dose not violate my rights. I think Hoppe’s comments are apropos here: to defend a right to reputation is a defense of what others believe, and/or a view that property rights are to values, not to things: See pp. 139-41 of Hoppe’s TSC: http://www.hanshoppe.com/publications.php#soc-cap for his remarks on value and property rights. Too long to quote here.

Ordstyrer JanMadsen: Could you elaborate on the different costs of IPR? I assume patent races is one of them.

Kinsella You mean races to get a filing date? I don’t see that as a big cost, really. Not directly. At least in the US, we have a first to invent, not a first to file, system, anyway.
The costs are varied and huge. I think it’s hard to estimate but a good rough estimate might be to simply look at the costs of filing fees paid to the patent office, patent attorney salaries and fees, and related costs (such as translation costs), plus the costs of paying patent litigators in defense (millions per action) plus higher insurance costs.
Then, there are other costs (Julio Cole, I believe, points out many of these, as do Boldren and Levine–see http://www.stephankinsella.com/ip/
But other costs are skewing research away from theoretical or fundamental research and toward the production of practical gizmos. And consider this kind of practice: HP makes its money from selling INK for its laserprinters, right? So what does it do? It has tons of patentable small innovations that protect some cartridge-ink system. It does this so that it can prevent people from making cartridges compatible with its printers. It’s just tying a patent to a device so that they can monopolize their ink. etc.
This is costly, surely. There are many others. See the papers by Cole; and Levine-boldrin on my page for more ideas about the costs.
One other cost I could mention: reduced production or competition *because* several small-medium size companies are *afraid* to even enter a given field, for fear of being sued they just find something else to do.

Ordstyrer I believe that this was the last question. Thanks, Stephan, for taking time to come to talk to us here at the liberator-chat.